Wednesday night, after market close, Tesla released the company’s Q3 2023 earnings report. Soon after, Tesla also held an earnings call in which executives including Elon Musk gave an update regarding Tesla’s future plans.
The earnings report and adjoining call touched on several aspects of Tesla’s business including profitability, vehicle production guidance for the entire year, FSD progress, the status of the company’s several manufacturing plants, energy business, and so on.
More importantly, Tesla also shared several new details about the Cybertruck including an 800-volt battery and powertrain architecture, an industry-leading 14-inch suspension travel, 125,000 annualized installed pilot production capacity, and a November 30 delivery date.
The Q3 earnings also shed light on Tesla’s financial performance for the quarter which saw sequential decline quarter over quarter and year over year.
Although the financial results were not good, the market had already priced it in, especially given the fact that Tesla had to shut down several vehicle production lines in the quarter to make upgrades that should improve the company’s profitability going forward.
However, most of the negative sentiment came from the following earnings call. During the call, Musk and his team tapered expectations for the Cybertruck, delayed plans for a new Tesla plant to be built in Mexico, and hinted that if the high-interest rate environment continues Tesla might continue to implement more price cuts that have negatively affected the company’s bottom line so far this year.
For the Cybertruck, Musk said that he doesn’t expect the vehicle to contribute to Tesla’s profitability in any meaningful way at least for the next 18 months. Musk also said that due to all the bells and whistles of the Cybertruck, ramping up volume production of the vehicle will be extremely challenging.
This took a lot of the moment out of Tesla’s stock which has grown by 100% since the start of this year largely fueled by Cybertruck and AI optimism.
Second, Musk also pushed back the start of construction for Tesla’s Mexico Gigafactory to 2025 and the start of production perhaps to 2026 or 2027. Tesla had initially said that Giga Mexico would begin construction this year and be operational by late 2024 or early 2025.
The third reason analysts were disappointed by Tesla’s earnings call is that Musk expressed overwhelming concern for the current high-interest environment and said that Tesla will be delaying short-term expansion plans until he gains confidence in the current macroeconomic environment.
All these factors added together amounted to the Q3 earnings call being one of the most bearish Tesla earnings calls in recent history. Several Wall Street analysts responded by decreasing their short-term Tesla price targets.
On Thursday, Tesla shares went down 10% in a single day, and on Friday opened the trading day down another 2%. Before the earnings call, Tesla shares closed at $252 per share, however, now after the recent pull pack, the EV maker’s stock is trading at around $215 per share.
As the largest Tesla shareholder, this share price decrease has affected Elon Musk the most. Currently, Musk owns 411 million Tesla shares which were valued at $103.5 billion on Wednesday.
However, after the recent pullback, Musk's Tesla shares are now worth $88.4 billion. This means the bearish earnings call has cost Elon Musk $15 billion personally.
In the last couple of days, Tesla’s market cap has also gone from $800 to $682 billion which is a $118 billion decrease. To put this into perspective, Tesla’s loss in the last couple of days is more than the entire market cap of Volkswagen and Ford combined.
For the next few weeks, there doesn’t appear to be any positive Tesla news on the horizon that will change the sentiment on the EV maker. However, Tesla has set the first Cybertruck deliveries for November 30, and if the truck’s specs come better than expected, there is a chance that Tesla stock can regain its positive momentum throughout the end of the year.
Currently, it’s hard to predict how Tesla's stock price will perform in the short term however, we’ll be sure to keep you posted as more information comes out. Until then, make sure to visit our site torquenews.com/Tesla regularly for the latest updates.
So what do you think? Surprised to see Tesla stock tumble so sharply following the earnings call? Also, what do you make of Tesla’s prospects in the short term? Let me know your thoughts in the comments below.
Image: Courtesy of Tesla, Inc.
For more information check out: Tesla Shares a Video of FSD 12 Autonomsly Driving Around Austin, Texas
Tinsae Aregay has been following Tesla and The evolution of the EV space on a daily basis for several years. He covers everything about Tesla from the cars to Elon Musk, the energy business, and autonomy. Follow Tinsae on Twitter at @TinsaeAregay for daily Tesla news.